Mexico has become a major player in global manufacturing, attracting companies looking to bring supply chains closer to North American markets, but home-grown pharma companies are also capitalizing on the country’s manufacturing muscle, increasing capabilities while betting on quality and aiming for international markets. Recent PharmaBoardroom interviewees share their insights.
Thriving Domestic Generics Production
Living next door to the world’s largest importer, North America, with the United States in the lead, has made Mexico an attractive production location for a variety of industries. That geographical proximity together with the country’s beneficial trade conditions and its skilled workforce are drawing industries like the automotive sector and MedTech to Mexico, but domestic companies who have invested in Mexico’s production capacity also abound.
Mexico is in a prime position economically and geopolitically, especially with the current trend of nearshoring and a strong Peso. We need to capitalize on this opportunity by investing in our manufacturing capabilities and positioning Mexico as a key player in the global market.
Daniel Del Conde, Grupo Somar
Generic medicines in particular have seen substantial growth in local production. “The landscape has been shifting in favor of national and regional companies, particularly in the generic sector, for quite some time now,” says Daniel Del Conde, CEO of Grupo Somar, producer of private label products and generics. “Over the past 12 years, these companies have consistently outpaced multinationals in Mexico’s pharmaceutical market. This trend has only been amplified recently, with last year’s pharma market growth reaching almost 8 percent, outstripping the economy’s growth rate.”
“The quality of Mexican products has improved significantly over the years. The Mexican industry is large, strong, serious, and committed to our country,” asserts Miguel Lombera, president of the Mexican National Association of Drug Manufacturers (ANAFAM), a trade organization that represents the most important generic manufacturing companies established in Mexico.
Understanding Affordability
According to Del Conde, Mexican companies are perhaps more aware of local market needs and able to adapt to them. “National and regional companies have consistently demonstrated growth rates two to three points higher than multinationals, reflecting their agility and responsiveness to market demands. Factors such as accessibility and affordability have propelled segments like the impulse and private label markets, driving faster growth than patented products.”
Somar in particular responds to the market by understanding the importance of pharmacy chains in Mexico, says Del Conde: “The key players driving accessibility and affordability in the market are the major pharmacy chains, such as Similares and Farmacias Guadalajara. These entities have made significant strides in making affordable generics accessible to the population. As their suppliers, our mission is aligned with theirs: to provide high-quality, affordable products to a population where over 50 percent live in poverty or lack access to essential services.”
Branded generics firm Laboratorios Kener’s GM and CEO Federico Prince agrees on the import of adaptability in the Mexican market and the advantage it lends to local companies like Kener. “One of our strengths lies in our flexibility—we can quickly adapt and prioritize manufacturing needs as required.”
Building Production Capacity
As a result of their success, generics manufacturers are making major investments in increasing their production capacity. Carnot Laboratories has committed USD 150 million to a new manufacturing facility, which Guy Jean Savoir, CEO of the family-run Mexican company, affirms is a result of increased demand. “This investment is driven by the significant growth and success we have experienced in both Mexico and Latin America, which has created a pressing need for increased production capacity. The new facility is being constructed exclusively to meet this growing demand for our products, both those currently on the market and those in our immediate pipeline.”
Kener has also undergone production expansion. “We have invested over USD 50 million in a plant and new products, establishing a new cephalosporin facility, which must be self-contained due to the nature of the products manufactured there,” says Prince. “We also have an oral solids plant where we produce tablets and capsules, alongside various injectable lines for ampoules, lyophilised products, and vials.”
Back to the Future
Apart from increasing capacity, Mexican companies are also looking to use their manufacturing strengths to break into new fields, such as vaccines, an area Mexico excelled in in the past, says Savoir. “Mexico was a prominent vaccine manufacturer until the late 1980s/early 1990s. However, due to systemic issues and government intervention, Mexico lost its significant vaccine manufacturing capabilities. Today, aside from the influenza vaccine, which is produced with Sanofi, all vaccines are imported,” a situation he laments that often leads to shortages. “Our strategy is to establish modern, biotechnological vaccine manufacturing.”
Raw materials are another area where Mexican production has flagged and there is potential for local manufacturers to fill the gaps. “In the past, there was more raw material formulation in Mexico. However, after NAFTA and other trade agreements, there was a reduction in the manufacturing of raw materials in the country. Although raw materials are still manufactured in Mexico, there is potential for much more,” ANAFAM’s Lombera maintains. “I believe we need to work together with the government to provide fiscal and other incentives that boost the development of the raw material industry in Mexico.”
Leveraging Quality
An important focus area for Mexican pharma producers is quality. “As a branded generics company, there is often pressure to launch new products regularly,” Kener’s CEO contends. “However, our focus is not solely on the number of launches but rather on the quality of products we introduce to the market. Whether we launch 10 products or two, our priority is on ensuring they are high-quality offerings that make a meaningful impact.”
Exploiting Mexico’s Potential to Go Beyond Mexico
Mexican companies are aware of their potential, particularly in the current context. “Mexico is in a prime position economically and geopolitically, especially with the current trend of nearshoring and a strong Peso,” Somar’s Del Conde believes. “We need to capitalize on this opportunity by investing in our manufacturing capabilities and positioning Mexico as a key player in the global market. With the right investments and strategic initiatives, Mexico can become a major player in the new era of manufacturing and trade.”
Kener for one is preparing to further build its international exports beyond LatAm. “We have harmonized the quality systems from these four agencies [the US FDA, Health Canada, EMEA, and COFEPRIS] into one unified system, preparing for audits and certifications. This positions us well for exporting beyond South America, which we already do, to new markets requiring these stringent quality standards.”
Meanwhile, ANAFAM’s president sees “the growth of production plants and the pharmaceutical industry in Mexico” as one of the country’s major opportunities.
